Gold breaks US$1,500 over growing economic headwinds

GOLD prices broke new ground (2019 highs) as safe haven flows surged over rising economic uncertainties. The United States has branded China as a currency manipulator after the People's Bank of China (PBOC) fixed the official midpoint reference for the Yuan above 7.00 per dollar.

Escalating tensions between the world's two largest economies raised bullion's appeal tremendously, as investors sought safe haven shelter over growing market turbulence. Shaky economic fundamentals and mounting geopolitical challenges look poised to take gold prices higher as investors turn increasingly risk-off in the current term.

What should investors look out for in the longer term?

Central banks (Thailand, India, New Zealand) have illustrated a dovish pivot with lower borrowing costs in response to growing economic headwinds.

Fed Chairman Jerome Powell, though signalling a less-dovish tone during the previous FOMC meeting (July-19), will face intense pressure to adopt aggressive rate cuts over growing downside risks.

Accommodative US monetary policy along with simmering US-China trade tensions will be a boon for the precious metal in the coming term.

Technical Analysis for Spot Gold (XAUUSD)

The precious metal extended 2019 highs as market bulls successfully breached a key psychological level of US$1,500.00.

Gold prices must stay above the key technical level (US$1,500.00) for a continuation of the bullish trend scenario.

Failure to sustain above key price levels (US$1,500.00) could see gold prices retrace towards US$1,480.00 (50.0 per cent Fibonacci Retracement Levels) and US$1,455.00.

A bullish breakout at US$1,515.00 will see gold bulls target the next main station of US1,535.00 in the near term.

Weekly Market Assessment: Range-Bound Key Resistance Level (1): US$1,515.00 Key Resistance Level (2): US$1,535.00 Key Support Level (1): US$1,500.00 Key Support Level (2): US$1,455.00